small_toyota_hiace.jpgThe AFTA agreement requires that the 6 original ASEAN countries (Malaysia, Thailand, Singapore, Philippines, Indonesia, Brunei) cut import tariffs between each other to zero by 2010. This requirement does not apply to new developing ASEAN countries like Burma, Cambodia, Laos and Vietnam. Currently it has been agreed that automotive tariffs on CBU vehicles and CKD kits are to be lowered to 5%.

Thailand says it will not reduce it’s import tax on CBU vehicles from Malaysia to 5% and will maintain it’s current 20% import tax, as it says Malaysia has imposed non-tax tariff barriers on it’s automotive industry despite reducing it’s import tax to 5%. Thailand Fiscal Policy Office director-general Naris Chaiyasoot says Malaysia’s requirements for automotive manufacturers to register for approvals is a non-tariff barrier and this does not comply with the AFTA agreement.

This might affect the competitiveness and profit margins of made in Malaysia automotive products exported to Thailand, like the new Toyota Hiace van announced recently.